Convergence Receivables sued my client for a $4100 credit card bill.
We went to trial and challenged the collector’s proof of their right to collect.
We won. Total savings were $4,268.28. Not a ton of money, but it was a break that came right when my clients needed it.
I love my job. Sure, I don’t get the huge payouts of the personal injury lawyers, or the television snippets of the criminal defense bar, or the posh offices and guaranteed salary of the corporate lawyers. But I get something a lot of lawyers don’t: I get to ask for justice. I represent humans who want nothing more than to be fairly compensated by the people and businesses who have screwed them. I punish law breakers, liars, scoundrels, and those who have no respect for the law. It’s like being a prosecutor without having to work for the government.
Ours is an adversarial legal system, meaning that some lawyer has to represent the guys on the other side (the cheaters, liars, and thieves). That guy’s job is totally different from mine. Rather than move the judicial process along to a fair and efficient conclusion, his job is to delay the justice system’s operation as much as possible. To do anything in his power to avoid that trial date where the truth will come out. He is the civil defense lawyer. NOTE: I don’t have anything against the civil defense bar. Many of its members are my friends. And I can’t really blame them for doing their job, which, unlike my own, comes with a steady paycheck.
One of the greatest justice-delaying weapons in the civil defense lawyer’s arsenal is Arbitration. If you’ve ever bought any product or service (except a residential mortgage loan) from a business in the past 20 years, you have signed a mandatory arbitration clause. Mandatory arbitration means that if the business screws you somehow – for instance by committing fraud, identity theft, selling you a product that explodes in your face or poisons you, etc. – you can’t take them to court. Instead, you have to go to arbitration. Most importantly, you cannot file a class action. So if a corporation screws you for only $250, you won’t be able to find a lawyer to represent you. If they defraud 10,000 people out of $250 (thereby profiting $2.5 million by fraud), nothing will happen to them.
Unsurprisingly, this drives people like me crazy. The idea that in the United States of America in 2015, you can make millions of dollars through fraud and get away with it by slipping 20 pages of ridiculous legalese into your contract is just absurd. I’m not alone. In 2009, Congress decided to do something about this. The Dodd-Frank Wall Street Reform Bill authorized the CFPB to conduct a gigantic, thorough study of arbitration clauses and empowered it to issue regulations limiting the use of arbitration in consumer finance – including class action bans.
Finally, after the CFPB study found what every lawyer already knows – that arbitration clauses and class action bans screw consumers – they have issued a proposed regulation prohibiting the use of class action bans. This is common sense and in accord with 90% of Americans’ idea of justice and fair dealing. But of course the industries who want to keep class actions from ever happening have thrown a major hissy fit. And they have paid their lawyers to write a bunch of lies and publish them.
Here’s what I’m talking about: An article by a partner at a major corporate firm had this to say:
“[A]rbitration could serve as a helpful complement to the CFPB’s complaint portal. More specifically, arbitration could be used to resolve those disputes that are not resolved through the complaint process.”
This is complete and utter bullshit. Everyone knows that arbitration clauses and class action bans save corporations money by keeping them from having to pay for things they do wrong that cost humans money. Otherwise their contracts wouldn’t be three feet long. But the shocking thing is that lawyers – who are ethically obligated not to disseminate false information – are willing to make false statements to regulators and the public just to appease their clients. An equivalent would be if, for instance, one of my clients asked me to write an article on this blog stating that any interest rate over 6% was illegal usury. That may have been the case in medieval Europe, but it isn’t true now. I would never publicly make a statement I knew was false.
But despite all of our ethical rules and professional standards, the fact remains that some lawyers get paid to lie. And that is why people think lawyers are full of it.
Fraud can be hard to define. Even the good editors of Black’s Law Dictionary have a hard time with it. But you know it when you see it. When you have been defrauded.
So how do you get a fraud case to court?
In Alabama, there are 4 elements to a fraud case – elements you have to prove in order to win.
So if a merchant says “I will sell you this autographed 1995 Ozzie Smith baseball card for $50,” and the baseball card is not actually autographed by Ozzie Smith, then it is fraud. However, if he says “If you pay me $50, I will get Ozzie Smith to autograph this baseball card for you,” and he takes the money and never gets that autograph, then he has not defrauded you. He just breached his agreement.
Example: the card dealer says “I’ll sell you this signed Ozzie Smith baseball card for $50 and put it in this blue envelope for safekeeping.” And he sells it to you for the agreed price, but the envelope is a red, equally safe envelope, then it is not fraud. The color of the envelope was not part of the basis of the bargain. You pay for the baseball card, not the color.
Example: The card dealer says “This baseball card has been autographed by Ozzie Smith.” But your wife is a handwriting expert intimately familiar with the handwriting of Ozzie Smith. She tells you “No, that’s not a real autograph.” You buy the card anyway. There is no fraud, because you did not rely on the dealer’s false statement. You knew he was lying.
Reliance is the trickiest part of a fraud case, and it is the one area where fraudulent businesses most often get off the hook. Why? Because in Alabama, it isn’t enough to show that you relied on a false statement. You have to show that your reliance was reasonable. In other words, in relying on the false statement, were you applying common sense? But Alabama law goes farther than that. Our courts have decided that if there is a written contract that does state the truth, then you have a duty to read the contract. If the the dealer promises on his mother’s grave that the card is autographed, but the contract says in fine print “None of the baseball cards we sell are autographed,” then your reliance on the dealer’s statements will be deemed unreasonable, and the dealer is off the hook. Even though he is a liar, cheat, scoundrel, and blasphemer, you won’t get any money out of him. This is why businesses love fine print. Because they have paid a lot of money to elect judges who uphold the illusion that everyone who has purchased anything in the past 50 years has no children and no job, and and spends all day reading and deciphering fine print.
Example: You’re at a baseball card shop, and you see a 1995 Ozzie Smith card with a signature on it. The label says “Price: $5. Not a real autograph.” The card dealer says “That’s not really his autograph. It’s a forgery.” You buy the card, and when you take it home, your wife (the handwriting expert) looks at it and confirms that it is, actually a genuine Ozzie Smith autograph. The dealer told you a lie. About a very important aspect of any baseball card. You paid $5 in reliance upon that lie. So there’s a misrepresentation of material fact, with reasonable reliance on your part. But there is still no fraud, because you have not been damaged. You paid $5 for a card that is worth at least $50.
Now in real life, most people know when they’ve been screwed. When people call my office after learning that they have been cheated, there usually is no question that they were told a lie, and that they’ve been damaged by it. Otherwise they wouldn’t be calling me. The real challenge for a lawyer is proving that reliance was reasonable and that damages were attributable to the false statements.
But fortunately, we are up to that challenge, and we have more weapons in our arsenal than just fraud. Deceitful statements in commercials or print ads could be false advertising. Incorrect statements in lending documents could violate the Truth in Lending Act. And false, deceptive, or misleading statements by debt collectors are prohibited by the Fair Debt Collection Practices Act.
Are you one of the approximately 482,000 VW Diesel owners in the USA with a car that was rigged to cheat its way through emissions tests? If so, here are some things to consider before you start freaking out:
So your car is likely to fail any emissions test. If you live in Alabama, you’re lucky because your high-polluting car fits right in with the attitude of our politicians, who probably think that VW’s deception is somehow actually a good thing. But even if you don’t live in a place with emissions testing, you may eventually want to sell your car to someone who does. And if you ever trade the thing in, the dealers are going to pay you a lot less for a car that they can’t sell in Arizona or Florida or some other such environmentally friendly place. So even if you’re 100% okay with trashing the air that your children breathe, you should at least care that you’re going to get a few thousand bucks less for your trade-in than you should have.
Of course it is impossible to calculate the dollar impact of VW’s deception on any particular car buyer, but it is possible that the financial loss alone could be several thousand dollars. Joining a class action settlement may not be your best bet. You can’t be forced to participate in a class action if you don’t want to. You should talk to someone who can help you figure out the way to go.
So why are such expert lawyers suing for fraud instead of breach of warranty? Because warranty requires that you notify the seller or manufacturer of the breach and give them a reasonable opportunity to cure it. And giving VW notice of the problem and a chance to cure it can take weeks. If you wait weeks to file your lawsuit, you can’t be the first in line to get your class certified and be the guy who gets to send out a hundred thousand checks for $20 each.
An individual, however, can treat this case like a normal breach of warranty. You can write a letter to VW at the address in the back of your owner’s manual. You can offer them 30 days to fix the problem. And when they fail to do so, you can take legal action.
There’s a big advantage to breach of warranty: attorneys’ fees. The Magnuson-Moss Warranty Act provides that if you win a breach of warranty suit after following the manufacturer’s protocol for making a warranty claim, they can be required to pay your lawyer’s fees. This means that your lawyer doesn’t have to get a cut of your own recovery – you keep all your money, he keeps his. Way better than getting $4,000 as compensation for $7,000 of loss.
If your car is less than 2 years old and has less than 24,000 miles on it, the VW Manufacturer’s warranty should obligate them to fix this problem. To make a claim under the warranty, you should write them a letter and follow the instructions in the back of the manual.
Bottom Line: VW is going to have to pay to fix this. But you shouldn’t just sit around and wait for the class action sharks to let you in on your small slice of the pie. Contact them immediately and demand warranty-covered repairs. If you live in Alabama or bought a VW Diesel from 2009, 2010, 2011, 2012, 2013, 2014, or 2015 in Alabama, write us or give us a call at 251.272.9148.
If you’ve been watching the news, you may have heard about the massive fraud that Volkswagen has perpetrated on its customers. For several years now, they have been marketing their “clean diesel” cars as being, well, clean burning, low-pollution vehicles. They even had scientific proof: emissions tests showed that the “clean diesels” were less harmful to the environment than other cars.
Unfortunately, it was a lie. VW actually rigged the cars to pass emissions tests. What does this mean? Your car might be illegal to drive. And worse, the fix can drastically affect performance.
If you have bought any of the following vehicle models, you should contact a consumer protection lawyer right away:
2009-2015 VW Jetta DTI
2009-2015 VW Beetle DTI
2009-2015 VW Golf DTI
2009-2015 VW Passat DTI
2009-2015 Audi A3 Diesel
Alabama residents who want to know their rights can call us at 251.272.9148, or fill out our contact form HERE. Don’t wait around for the class action notice to arrive at your doorstep. Talk to a real, local lawyer you can trust.
Breach of the Peace.
A secured creditor can only repossess their collateral if they can do so without any “breach of the peace.” The Uniform Commercial Code doesn’t define “breach of the Peace,” but the Alabama Supreme Court has. And they’ve adopted a pretty common sense rule: if the repo man violates a criminal statute, then they’re breaching the peace.
Despite this clear and wise rule, repossessions that breach the peace happen all the time. These really bother me because I believe that they show a fundamental disrespect for the human dignity of debtors. How? Because it should be obvious that you can’t commit crimes in order to repossess a vehicle.
“But it’s my job!” says the Repo Man.
“We have a right to get paid!” says Title Max or the car dealer.
OK let’s consider that. My job is to win lawsuits. What if I went into the law offices of my opponents and burned up their files. “I’m just doing my job.” Right? Of course not. A crime is a crime. No matter how poor or black or redneck or worthless you think your debtors are.
So they cannot break any criminal law. What does this mean for you? Here’s some examples:
In other words, missing a payment on a car note does not mean that repo men can commit crimes against you with no penalty. Despite what many creditors, banks, and “pro-business” politicians may think, a person does not become less than human just by falling into financial trouble. As I said, crimes are crimes.
Conversion.
They have to give your stuff back. That’s all there is to it. If they don’t pack it up and send it to you or let you come and get it, then they’re stealing your stuff. If they want to charge you $40 to come and get your own property that they have taken, that is conversion. They can’t do that. If they take valuable things or cash, then you can sue them for that.
Many retail installment contracts and security agreements give them the right to charge a reasonable “storage fee” for holding onto your stuff until you come get it, but even where such fees are authorized by a contract, there is no “storage fee” due unless some actual “storage” took place. If you go to their lot the day of the repo and your belongings are sitting right there in the car that was repossessed, then they haven’t stored anything for you. So no “storage” fees.
They get this one wrong All—The—Time. But it’s still wrong.
Trespass & Property Damage.
There are two types of trespass: trespass on real property (land and homes), and trespass against personal property (cars, boats, books, TVs, everything but land and homes).
Secured creditors do have a privilege to trespass on your own property and to travel on common property (like roads and public parking lots). However, they are not generally allowed to trespass into residential property of people who don’t owe them anything. For instance, if my car is in my back yard, the repo man cannot drive through the neighbor’s yard and drag it out over his grass.
Trespass against personal property generally means physical damage. If they unnecessarily damage or destroy your personal property, then they can be held liable for it.
But beware of one thing: it is also a crime to conceal collateral with the intention of hindering your creditors.
So What If They Break the Law?
A lot of people call me with tales of repossession misbehavior, and they think that if you can prove that the repo man broke the rules, they get their car back without paying for it.
That’s just not true.
Unless the repossession occurred a) when you were not in default, or b) after you’ve filed bankruptcy, you can’t get the car back without paying.
The penalty for an unlawful repossession is cash damages. Generally, they have to pay for whatever damage their misconduct caused, and in some cases they have to pay extra for violating certain laws.
A secured creditor gets to set off these damages against what you rightfully owe. So unless you’ve almost paid off your loan or their conduct was just really bad, then a wrongful repossession suit probably will not put any cash in your pocket, though it can shield you from a lot of future debt.
Example 1: You owe $10,000 on your car. It gets repossessed, and the repo man recklessly drove across your yard and crashed into your boat, causing $5,000 of damage.
They sell the car at auction for $3,000, leaving you with a deficiency balance of $7,000. If you sue them for trespass, they can counterclaim for the contract deficiency, which is $2,000 more than your trespass damage. So the court enters a judgment for them in the amount of $2,000. You reduced your debt, but that doesn’t help you very much.
Example 2. Granny owes $5,000 on a $30,000 mobile home. She bought it at high interest with $2,000 down 15 years ago. A repo man comes out with a 5th wheel and tries to haul it off, and in so doing, he pushes Granny onto the ground and knocks open a sewage pipe, causing rotten S— to fly all over poor Granny. This is a breach of the peace situation that allows for statutory damages of $12,000, plus some emotional distress damages for being such a jerk to a sweet old lady. Granny will get a cash judgment.
Identity theft is becoming more common than ever. It seems that every few weeks, another massive security breach is revealed on the news. And identity theft can start in a lot of ways. From a digital security breach by Russian hackers to an old-fashioned thief digging up an old credit card statement from your garbage to an angry ex-wife spending money using stolen credit cards. Regardless of how it happens, a telltale sign is the existence of bogus charges on your credit card or debit card.
Maybe you’ve seen TV commercials where credit card companies advertise their “Zero liability for unauthorized purchases” policies. This always makes me laugh, because it is a super clever attempt by the credit card companies to seem generous. And here’s why it is bullshit: they have to do that.
If you see a charge on your billing statement that you didn’t make, then you can simply write a letter to the credit card company disputing the charge. And once you provide them with written notice that you didn’t make the charge, you cannot be held liable for more than $50. By federal law. So even if an ID thief spends $2,500 on your card, the bank can’t charge you more than $50.
Furthermore, if you decide not to pay the disputed amount, the bank can’t sue you for it. Because the Truth in Lending Act requires that in any action to enforce a credit card liability, the issuer of the card is the one who must prove that the charges sued for were actually made by the person being sued. 15 U.S.C. Sec. 1643(b).
So if you do see an amount that you don’t recognize on your bill, here is what you do.
First, you flip your credit card statement over and look for the “correspondence address” or “billing dispute address.” If the issuing bank has an address for disputes that is different from the payment address (and they usually do), then you MUST send any dispute to the designated address.
Second, you send a letter to that address describing briefly your dispute. You don’t need to give them the history of your credit card or the reason why the charge is bogus. You just need to tell them that you didn’t make the charge and that you aren’t going to pay for it. Your letter must include the account number, your name and address, and a precise description of the charge you dispute.
They must respond within 30 days. They’re supposed to conduct an investigation and figure out if you really didn’t make the charges. If they conclude that you didn’t make the charges, they have to let you off the hook for the charges. If they conclude that you did make the charges, then they must send you documentation that they’re right and you’re wrong.
If they don’t comply with these rules, then they cannot charge you for the disputed amount or any finance charges thereon.
Like many states, Alabama has a criminal statute that bans certain types of harassing communications. The statute says this:
Ala. Code Sec. 13A-11-8(b)
A person commits the crime of harassing communications if, with intent to harass or alarm another person, he or she does any of the following:
a. Communicates with a person, anonymously or otherwise, by telephone, telegraph, mail, or any other form of written or electronic communication, in a manner likely to harass or cause alarm.
b. Makes a telephone call, whether or not a conversation ensues, with no purpose of legitimate communication.
c. Telephones another person and addresses to or about such other person any lewd or obscene words or language.
Nothing in this section shall apply to legitimate business telephone communications.
(2) Harassing communications is a Class C misdemeanor.
A lot of people who are being hounded by debt collectors, creditors, or other folks who want money often ask me: “Isn’t this Harassing Communications?”
Well, unfortunately, a lot of the worst offenders are protected by the last part of the statute, which shields “legitimate business telephone communications.” Some small loan companies, payday lenders, and buy-here-pay-here car dealerships are often guilty of the worst sort of telephone harassment. And if they originated the loan or account, then they are not subject to the FDCPA. Since Alabama does not have its own debt collection statute, there often is no way to take action against original creditors to whom you actually owe money.
But what if they don’t have a legitimate business purpose? For instance, what if they are calling you and asking that you pay for someone else’s debt? Or if you have worked out a settlement and they decided to back out of it?
If that is the case, then you probably can do something about it.
But the harassing communications statute is a criminal statute, not a civil statute. Which means that if someone violates it, only the District Attorney or Alabama Attorney General can prosecute them for that crime. However, if they are committing a crime and their behavior is bad enough, then you may be able to personally them to court under a tort theory like outrage or intentional infliction of emotional distress.
HomeGoods advertises its ability to offer “department store” brands at way less than department store savings. Maybe sometimes they do. But when you go shopping there looking for a discount, don’t just take their word for it.
On July 23, 2015, a federal class action lawsuit was filed against HomeGoods, a large discount retailer that has stores nationwide. What did they do wrong?
Well, like all stores, their products have tags or stickers announcing their price. In addition to the price, though, HomeGoods adds a special “Compare At” price, which is invariably much higher than the HomeGoods price. The purpose of the “Compare At” price is, of course, to make you think that a $10 coffee mug really is worth $50. What HomeGoods doesn’t tell you, though, is that the “Compare At” number is not based on any real market research, and you probably won’t find any stores actually charging the super-high “Compare At” price.
In other words, they’re false advertising the savings that you get by shopping there. That is why they’ve been sued. The lawsuit seeks to require them to either make their labels accurate, or drop them altogether.
This doesn’t mean that HomeGoods doesn’t have good deals. I’m sure they do. In fact, my wife will probably check it out and come home with bags of “deals.”
So just be aware: if you see a coffee mug priced at $10 with a “$40 value,” don’t fall for it.
The text of the HomeGoods Lawsuit can be found HERE:
https://www.truthinadvertising.org/wp-content/uploads/2015/07/Metoyer-v-TJX-et-al-complaint.pdf
If you have not yet had the pleasure of money being forcibly collected from you, then you may wonder just what happens if you don’t pay a debt. Of course, your creditors are probably going to threaten you with garnishments, lawsuits, and other scary tactics. Debt collectors can be even worse. And some folks fear that if you don’t pay a debt, you can have your paycheck garnished at any moment. That isn’t true. But I’m here to tell you that for most consumer debts, the collection process is a long journey that may or may not end in money actually being jerked from your paycheck. The most important thing to know is this: you can’t get garnished unless someone has a judgment against you. And it takes months to get a judgment.
The process starts when you first default on a debt obligation. Default usually means that you failed to make a payment when it came due. If you get a credit card bill asking for a $150 minimum payment due by June 1st, and you don’t pay it, then on June 2nd, you are one day delinquent, and you are in default. Under most contracts, once you have defaulted, then you can be sued. But that usually doesn’t happen.
Most creditors charge off accounts when they are 90 days delinquent. “Charging off” doesn’t mean that you don’t owe the debt; it just means that the bank no longer considers your debt to be good for its face value. Most credit card companies begin collection efforts at this time. They’ll send letters, make phone calls, and potentially refer your account to a collection agency or sell your account to a third party junk debt buyer.
Once a creditor has given up on getting paid by you voluntarily (this can take anywhere from 60 days to 2 or 3 years), they will either sell the account to a debt buyer, who will begin the collection process anew, or they will hire a collection law firm to sue you.
Once they sue you, they have to serve you with a written copy of the lawsuit. If they know where to find you, this takes a week or so at the best. Once you receive the lawsuit, you have a certain, limited amount of time to answer the complaint. In Alabama, you have 14 days to answer a lawsuit in District Court or Small Claims Court. You have 30 days to answer a complaint in Circuit Court. You have 21 days to answer a complaint in federal court. If you’ve been sued for more than $10,000, then you must be sued in either Circuit or Federal Court. If you don’t answer, or if you answer admitting that you owe the money, then a judgment is entered against you.
Once you answer the lawsuit, the case gets set for the trial docket. In District or Small Claims, this usually means you’ll be at trial in 2 to 4 months. In Circuit Court, trial will typically be 6 to 9 months from the date of your answer.
They cannot garnish you until they have a judgment. So even if you lose at trial, just by fighting the lawsuit, you can buy a lot of time. Time to raise settlement funds, or file bankruptcy, or get a new job that can help you pay things off. Or just a bit of breathing room.
Once they have a judgment against you, they still cannot enforce it against you for 30 days.
After the 30 day stay has passed, they can seek and obtain a writ of garnishment from the court. This requires them to state the employer or bank that they want to garnish. Once they get the garnishment issued by the court, they have to serve it on your employer or bank. A bank account can be zapped immediately for the funds that are in it. Your employer, however, obviously cannot withhold wages until they’ve been earned.
So to add all this up, it works something like this: a really fast and lucky creditor may move as quickly as the legal system allows towards garnishment, and their garnishment timeline will look something like this:
Default -> Immediate Suit -> Answer Period (14 to 30 days) -> Default Judgment Motion (~30 days)-> Stay (30 days) -> Garnishment.
Total Time Between Missed Payment and Garnishment: 74 days.
On the other end of the spectrum, a circuit court lawsuit where you don’t roll over like a dead dog will go more like this:
Default -> Informal Collection Efforts After Charge Off (2 to 24 months) -> Lawsuit -> Answer Period (30 days) -> Waiting for Trial (6-9 months) -> Enforcement Stay (30 days) -> Garnishment
Total Time Between Missed Payment and Garnishment: 10 months to 3 years.
So to make a long story short, and to oversimplify an often complex judicial process, the length of time that it takes to get garnished after you quit paying someone will be at least 2 1/2 months, and could be as long as 3 years (or never!).
Of course, better still is to not get garnished at all, by either beating the lawsuit, working out a settlement, or filing bankruptcy.
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